Despite numerous delays on the part of the seller, we were still looking to close within a somewhat reasonable time frame (when it comes to new construction condominiums in New York City).  As if on cue, we received word that the mortgage broker had potentially messed up the deadlines on some of the documentation, thereby delaying the closing.  When trying to contact Mr. Mortgage (real names have been changed), he refused to call back….for several days.  Numerous attempts at contact via phone, email, carrier pigeon, etc., didn’t result in any word back.  In the midst of this, the clients were rightfully ridiculously nervous.  This was followed by a healthy amount of further “delays” , which resulted in the client’s paying for things they shouldn’t have paid for at the closing.  They didn’t care at that point. They wanted their keys and they wanted to be done with it.  At the closing table, there was this precious window of opportunity for Mr. Mortgage to make things right in front of my clients, the Real Estate broker, the Sponsor, and the bank.  A chance to remove any tarnish on his reputation and work with these people again on future deals (NYC is much much smaller than you think.)  Admit the mistake, pay the small fee or at least vouch for it, and be a hero.  Nope.  Woooommppp Wommmmppp.  He refused.  Coincidentally, on my way home, two people rode with me in an elevator.  In mid-conversation, one women said to to the other “No one trusts anyone anymore because no one takes responsibility.  They just pass the buck.”  And that should teach us (lawyers, brokers,professionals, etc.) a lesson: Take  Responsibility.

I represented my first Real Estate clients at the ripe old age of 24.  I was beyond nervous and, although seemingly confident, I nevertheless knew that things would come up with which I would need help.  I had mentors, which was great, but a last minute issue came up and I couldn’t reach them.   I ended up completely messing up something at the closing which resulted in an adjournment (this rarely happens-almost always because someone from somewhere has tragically died or there is a monster amount of traffic somewhere).  Of course, like any closing, there were about 394 different lawyers, and, of course, they all charged something due to the delay.  I first attempted to calm my clients down after they incessantly berated me (they were right) and then I paid the fees associated with the delays.  I lost money on that deal and I didn’t have much money to waste at that time.  The lesson I learned, however, was invaluable : Admit your mistakes.  Take your lumps.  Accept responsibility. Move on. It has served me well in my years of practice.

Too often lawyers and other professionals advertise an air of invincibility.  In pictures, we pose before bookshelf after bookshelf, loaded with law books we purchased at garage sales and haven’t opened in years. We puff our chests in our suits and promise aggressive and efficient representation.  What you don’t see, when the photographer walks away, are the phone calls from one lawyer to another desperately seeking an answer to a pertinent question.  You don’t see the suits come off while we aimlessly scour Lexis or WestLaw, looking for cases which will help your position.  We desperately want to hide any sense that we may make a mistake.  We’re taught that way (and it’s why we spend thousands of dollars on malpractice insurance).  But, every once in a while, when we make a mistake (I’m about all professionals here) it’s better that we own up to it.  There’s some decency in saying “I’m sorry” and doing what needs to be done to correct it.  My guess is that, you, the potential client, respects this more than circular answers that make you scratch your head.  In our world of online reviews and recommendations you’re bombarded with messages about how amazing a firm or a brokerage is (we’re guilty of this also).  Everything seems sanitized and shiny at the same time.  I think, perhaps, it may be high time to wash the artificial sheen of our corporate messages and declare that, yes, we will do our very best in dealing with your issues.  We’re experienced and we’ve seen a lot before.  But, also, in the unlikely event that we do mess things up for any number of reasons that people mess things up, we’ll look at you and say: “My fault, but I’ll make it right”.

Let me give you an example:

Broker complains to you, purchaser of  a new apt, that Broker can’t get in touch with the lawyer and lawyer is not responsive (not me).  Mortgage broker also needs a copy of the Contract to ensure that they can begin the process of obtaining a Mortgage Commitment (i.e.to get you money) but the Mortgage broker can’t get a hold of the Real Estate broker.  With Basecamp that problem is now solved.  All parties can communicate securely (minus you, the client) and can retrieve whatever documents they need to ensure a smooth closing.  Your title company will never be able to say they couldn’t get figures from the bank and you’ll never have to go and search for someone else’s phone number.  And no one will ever be able to say “He’s not calling me back” again.  And it’s all free.  We’re doing it because we think we can make things just a bit easier  for our clients.

Closing or Selling a home can be stressful enough as it is.  Leave the rest to us.

• Everyone has already filed.
• Unemployment numbers are getting better
• Banks are electing to workout foreclosure deficiencies (and sometimes forgive them) and people longer need to file Bankruptcy to get rid of that debt.
• People are saving more, which, ironically, may be hurting the overall economic recovery.

In as much as I can tell, the above are merely half truths.  Yes, people may be saving more, but that doesn’t mean they’re able to pay off debt at mafia (so I hear) interest rates.  Individuals may be working with banks to give back their homes, but many of them may simply be living in their underwater homes and are mired in litigation.  In other words, it’s not Doomsday yet.

Bankruptcy attorneys are going a little nutty because of all of this.  In the halls of Courtrooms you’re hearing “Are your filings down too?  What’s the story?”  My colleague, Jay Fleischman, on his informative website, points out that many Bankruptcy attorneys are trying to diversify their practices.   Certainly 2012 is not as profitable as 2009 was.  This, however, only gets us half way.  We still have to deal with the 800 lb. gorilla literally staring at us from across the room.  The 800 lb gorilla is the crisis surrounding student loans.

Over the next 5 years or so, Student Loans will be to Bankruptcy what foreclosures were to Bankruptcy during the previous 5.  The conversation so far has been pitifully inadequate and, shockingly enough, divided along partisan lines.  On the one hand, you have the President attempting to keep interest rates capped low, but only for Federal Loans. On the other, the Republicans have stood firm in the belief that you shouldn’t extend the interest rate cap (currently 2.75%) on these loans for several years when they were due to expire now.  Both approaches are literally akin to screaming “cut it out, only the front of the house, I told you!” at a drunk arsonist with a blowtorch on your roof.  They don’t do very much to solve the overarching problem.

Total student loan debt at the end of 2011 hit almost 1 Trillion (with a “T”) dollars.  More than all outstanding credit card debt and auto loan debt in the U.S. combined.  And it’s not the federal loan debt that’s really the issue here.  It’s the private student loan debt.  Private lenders charge interest rates that are wayyyy higher than the Feds.  Sallie Mae can charge up to 9.75%.  These loan, as they current stand, are almost never dischargeable in Bankruptcy.  A recent case out of Ohio found that an individual who, after being declared legally blind, having transplants of several organs due to early onset of Diabetes, begin declared disabled by Social Security Administration and living with his father because he couldn’t find a job in his rural community, STILL had to make minimal payments to his lender for a period of two years before the Judge would be ready to rule that he could discharge his student loans.  It’s insanity, but right now, it’s the law.

Over the next few posts I will be covering the Student Loan crisis, and what reforms need to come about.  Notice I didn’t say “should” come about.  We’re dealing with the same crisis we dealt with just a few years back.  Many clients that come into my office these days can’t pay the rent because of their student loans. I have to shrug, and it kills me to do so.  Nothing we can do for you right now.  But this is an issue that has to be dealt with sooner or later.  And not in a piecemeal way.  I would also welcome your comments and thoughts about what we can do to deal with this problem.

Typical homeowner is a few months behind on their mortgage payments for a variety of reasons. Typical Homeowner is now getting calls from his or her lender followed by nice letters from the lender. In essence, the letters state that the bank realizes Typical Homeowner (let’s just call him Tim), is behind on his payments and that times are tough. Further, the lender states that it want’s to work with Tim to try and keep him in this house by doing a loan modification. Tim feels relieved. He can stay in his house and not move his wife in children in with his parents (happens much more often than you think). Lender asks Tim to send his last 6 months worth of pay-stubs, last tax return, some bank statements, some miscallenous docs, and a “hardship letter”. The hardship letter is akin to crying on paper and is a horrible and idiotic requirement essentially forcing the homeowner to spell out how he got into this predicament in the first place.

Now the lender gets all of this stuff and asks Tim to wait some time before it gets processed. Tim patiently waits for the lender to call back to hear whether or not he’s going to get a loan mod. Lender never calls. Tim calls the Lender and the Lender says that they are “processing” the application and they need more time. Tim waits. No call. Calls again. Lender asks Tim to resend all of the info since they’re missing a few pages. Tim, quite confused, resends the info, but he is fairly certain he sent all of the paperwork in the first place. After resending the paperwork, Tim calls back a few weeks later. Now the lender informs Tim that Tim’s paperwork is out of date and he needs to resend everything over again (because it’s taken so long for them to process it). Tim grows more confused, but, again, because his house is on the line he resends everything and, again, the lender tells him to wait for their call. The lender never calls. So Tim does. The bank once again states that he has to wait on the paperwork to be processed. In the interim the bank isn’t accepting Tim’s mortgage payments, but, no worry, the loan modification will come in soon enough. Tim again calls and again the bank seems to be missing paperwork. This goes on for a while until one of the following happen:

1. The lender sells the note and now Tim has to deal with another company and re-do everything all over again.
2. Tim gets served with an action for Foreclosure.
3. Tim gives up and stops making payments on the house and calling the bank because he finds it to be fruitless.

This is the disgraceful state of foreclosure in our country today. Talk all you want about moral hazard and people biting off more than they can chew. I don’t care. But at least don’t make the process to correct this look like something Kafka would create.

Ironically, the easiest (and I use this term loosely) way to get a loan modification for many people is to have their house go into foreclosure and deal with this in Court, where a judge orders lenders and homeowners to produce documents and find a way to settle (sometimes).

This mess, and it really is an absolutely absurd mess, is a perversion of what the justice system was intended to do. No one gets a fair shake. Robo-signings, homeowners without representation, banks that don’t have documents. None of this makes any sense nor does it resolve anything at all for either the bank or the homeowner. Until we get this mess in order (and I have absolutely no confidence that will happen), this housing market doesn’t move. Until we get this mess in order, people will continue to lose their homes, not because they cannot pay for them, but because a processor in Indiana forgot to print page 3 and now the homeowner has to send in the documents again. This is not what was bargained for, and it appears government has absolutely no desire to deal with it (ironically, they seem to be the only people who can).

Oh, and to make things crazier, banks are now sometimes paying people to not defend their foreclosure actions. I swear, you couldn’t make this stuff up.

Law School is a Choice  

Let us pretend for a few moments that us lawyers actually had a hand in deciding to go to law school.  Let us pretend that we knew specifically what it was that we were getting into.  Let us pretend, for a moment, that we didn’t fork over all this money, equivalent to buying a home in the Mid-West, by relying solely on a 3 page glossy brochure.  We went.  We knew the deal going in.  If we can agree to this premise, then we can move on to the following:

Law School Was Never Intended As A Career for Everyone

It’s pretty important to note that law school applications didn’t rise by 20% recently because thousands of college graduates had an opportunity to watch some really exciting scenes from Law and Order, for the older matriculated students, Matlock, and decide that this was fun and exciting and they should pursue it.  Applications went through the roof because young adults, who couldn’t get a job paying over 30k no matter how hard they tried, decided to continue education and hope that “stuff” clears up in a few years.  That’s not to say everyone did this, but I can guarantee you that there was no “Come to Jesus” moment that happened in 2008.  Or 2009.  Or 2010.  People applied because they had to.  Not because they wanted to.  Yes, there were exceptions to this.  Yes, some people always wanted to be lawyers.  But there’s no way you can convince me that those people were in the majority.  The reality is that the people who want to be public servants, the one’s we actually NEED in this profession, aren’t going anymore, because it’s just not worth it.  They can’t afford it.  They made a calculation in their heads.   And that’s an absolute shame.  Because we don’t need a glut of decent attorneys for decent firms.  We need exceptional attorneys defending the constitutional rights of individuals when state and federal budgets for courts and Legal Aid are slashed left and right across this country.

Law School is a Business and Business’ Make Money

If you want to find a way to reform law school, then it can’t be the law schools that do the reforming.  My firm earns its revenue from Bankruptcy and Real Estate work.  If there was a call to lower Bankruptcy and Real Estate fees and make them standard across the board, it’s not going to be the Bankruptcy and Real Estate lawyers who answer that call.  Because it’s a business.  And the more we hear about how to change the way legal education is taught the less we talk about the reduction of the cost of legal education.  The ABA president recently gave a speech where he blamed law students for being unemployed.  He’s completely off base and ridiculously out of touch but you know what wasn’t discussed?  Changing the very business of law school. And it won’t be.  Which brings me to my next point:

If You Want to Change the Price of Law Schools, Cut a Year

You don’t need the third year.  You need two years, max.  Your thinking changes the first year. Second year it gets crystallized in your head.  In the third year you’re taking electives which make you no better as a lawyer.  Want to see if you like employment law?  Intern.  Want to make sure criminal law is the right fit for you? Sit in court for a few afternoons.  Or ask a defense attorney about their practice.  Or ask 5.  But you’re not going to have any idea of what it’s like to be a Bankruptcy lawyer by reading case law from California.  The third year should be clinical work and clinical work only.  That way, when a graduate does get a job, if there is a job to actually get, they know to do…. stuff.

Don’t Be Scared to Quit:

We have this absurd philosophy surrounding quitting.  I personally know of no one who ended up homeless after they quit law school.  No one threw eggs at them when they crossed the street.  If a student doesn’t like law school, the student should, for the love of God, quit law school.  It doesn’t mean the student is some failure.  To the contrary, it means that student has an inclination about what they DON’T want to do with the rest of their lives, which is more than I can say for other people I know.  Students also don’t need “Exit Counseling” if they decide to quit.  They don’t need to be told by an administrator that they should spread their wings and fly.  They should be told that if they work in some form of government or community service for a few years, their debt would be forgiven.  You’d have scores of people headed for the exits if this was implemented.  But it’s not.  And it wont be.  Because no one wants to be the person who tells a student at a 3rd tier law school that they’re likely going to be an associate at a Personal Injury defense firm pushing compliance conference orders across the table, rather than the next Justice Sotomayor.  Steve Jobs quit college.  Bill Gates did too.  You think it’s a big deal if you walk away from Cooley after a year because you realize you don’t like the law?  Everyone will survive.  You’re no worse for it.

No Clinical Courses Can Make up for the Fact that Economy Sucks

I was, and still am, on the bandwagon of those who want to incorporate clinical and work experience for law students.  Students should know how to do legal research and file a case.  And that will do wonders for them…unless and until their employer closes up shop.  There are simply too many lawyers and not enough jobs out there.  We keep dancing around this issue as if it’s not right in front of our faces.  If there’s no money in the coffers to pay for Susan to work at the firm, it really doesn’t matter much if Susan knows how to file a Habeas Corpus motion on Day 1.  Because the Firm can’t afford paper. Until this economy turns around, it’s simply senseless to suggest that there will be some magical pill that cures the woes of recent graduates.

Student Loans Are the Next Bubble

There is currently over ONE TRILLION DOLLARS in Student Loan debt across this country right now. That’s with a mother effin ”T”.  People call me every day and want to file Chapter 7 Bankruptcy in New York because their student loan debt is literally choking them.  In 70% of cases in this office, an individual’s student loan DWARFS their credit card debt.  And they can’t do a thing, because unless you have some exceptional circumstances, student loan debt cannot be discharged in a Bankruptcy.  Mind you much of this debt is for private student loans.  And that number keeps growing as tuition increases (WINK WINK).   The ones that have much higher interest rates.  The ones that big boy banks underwrite and then trade (remember mortgage securities, folks? That was a fun time.)  To even suggest that you’re going to solve any problem dealing with the price of law school without massive reform of the Student Loan system and all of its players is ridiculous.

It’s Up To The Student

The real bargaining power comes from the prospective student.  And so it should.  If you want to be a lawyer and make money, you still can.  There are so many people out there who do.  Not just the people at Skadden or Sullivan. Mid size firms and even small ones have plenty of people who actually are able to pay the bills and still like their profession.  But it’s so much harder to do now then it was even five years ago.  We cannot rely on the very institutions that make huge profits from the pockets of law students to somehow change the way they do business…to make less profit.   It’s silly.  There will certainly be some cosmetic changes in the next few years.  But serious change won’t come from them.  We have the answers.  We all know that if we cut a year from law school, cap the amount of interest that student loan companies can charge and create lawyers who actually work for the public good in exchange for loan forgiveness, we’d completely revitalize the profession.  But who do you expect will do this? Congress (I know, I’m laughing too.)  The banks?  Law Schools?  No.  The decision is up to you and you alone.  It’s a chance and a choice.  Like everything else in life.  Cost/Benefit.

Ari Kaplan is right in that we are at a watershed moment.  But it’s not a moment about how he re-tool the cost of Legal Education. We know how to do that. It’s not whether we should let Coca Cola advertise on an Emanuel Law Outline to subsidize the cost of a textbook. It’s a really about whether or not it’s still worth it to go in the first place. It’s a question that should be asked constantly.  It’s a question that will only get louder and louder as more people apply for fewer and fewer jobs out there.  And that answer is up to the individual, as it should be.

A few months ago, we began to sit down and figure out what the direction of the Firm would be, moving forward, as we’ve grown since 2010.  And we began to realize a few things:

1. The area of Bankruptcy law is getting more crowded in New York City as more and more attorneys are coming into the practice and each website slowly begins to look almost identical to one another.

2. Many people were (are) coming to us and complaining about problems with receiving a loan modification even when their lender told them to stop making payments (thus ruining their credit). Now these same people face foreclosure in New York.

3. We like doing work for the most underprivileged in our New York City area but realized we could do more.

4. I like donating money to charity.

So, over the next year, here’s our plan:

While I’ve no doubt that you like reading the blog (except the emails I receive that say  ”I don’t like reading your blog.”) I overwhelmingly hear about how much you prefer our videos. So, we’re going to give you more of that.  In early 2012, we’ll roll out a video page that, I think, is unlike anything you’ve seen before on a law firm’s website.  As always, we’ll ensure that the videos are clear and understandable.  But we also realize there is not a “one size fits all” approach to either Bankruptcy or Real Estate, and so our videos will be more tailored to you.  Personalized.  They’ll answer questions directly.  Why?  Because there is so much out there on the internet, and the last thing you want is to research for hours and fail to find anything that address your particular situation.  In other words, I think we can do it in a different way that will be more easier, more direct, and more appealing for you.

Another issue we’ve identified is how many people across New York City have been victimized by their own lenders when it comes to loan modifications. I say victimized sincerely.  Client after client complains about listening to their own lenders advice on not making future payments, to their detriment.  We hope to change that.  In 2012, we’re going to substantially expand our presence in Foreclosure Defense in New York City.  It’s one thing if “Loan Mod USA “(fictional name) tricks someone into believing they can reduce their principal and payments.  It becomes quite another when the very bank that financed your home is telling you to take steps that hurt your credit score, and then foreclose on that home.  We hope to change that, and we believe we will. Look for a Gershburg Foreclosure Defense site in January 2012.

I’m perhaps most excited to address #3 and #4 above.  Ever since I established this practice five years ago, I believed it was imperative that I give back to the community in the form of Pro Bono work.  The reason?  I basically learned the practice of Bankruptcy through doing volunteer work at the Brooklyn Bar Association.  Each time I did a pro bono case I felt as if I was doing something good for the Brooklyn community.  Is it cliche and cheesy?  Maybe, but it was and continues to be, quite important for me.  Having said that, at the time of this blog, the Brooklyn Bar Association has 30 open Pro Bono Bankruptcy cases waiting to be filed.  I’ve called them and said that my firm would personally take on each one of them in 2012.  We hope to bring the open case load down to 0 by December of 2012.  Why?  Because it’s important for us and it’s the right thing to do.

This year, we’ve been able to donate money to the Wounded Warrior Project, an amazing organization that helps develop programs for  severely wounded  Vets come back home.  Also, in conjunction with the Street Academy for Financial Literacy and an absolutely amazing organization, Pencil.org, we’ve been able to bring Financial Literacy programs to a middle school in Brooklyn, and we are eager to expand this, with Pencil’s help, to several schools across Brooklyn in the coming year.  We’re teaching kids the value of a dollar and how to save it.  We’re teaching them about credit and debt and the relationship they have.  And we’re teaching kids good money habits that can transform their lives as they grow older.

In addition, the communities where our offices are located (one in TriBeCa and one in Sheepshead Bay) are incredibly important to me.  I’ve lived and worked in both areas and they are close to my heart.   In 2012, we ‘ve pledge to donate up to 10% of the profits of Daniel Gershburg, Esq., P.C. to various charities working in both areas (email us if you know of worthwhile charities in either community). Beyond that, we’re putting even more of an emphasis on doing volunteer work .  In fact, starting in 2012, our staff they will receive paid days off for doing volunteer work at the charity of their choice.

So, why am I telling you all of this?  First, because I think it’s time we did this.  I’m incredibly happy with our website, but it’s time we do something different…again.  I think that law firms and social media and tech are a great combination. In fact they’re so great that everyone is doing it. In fact so many people are doing it that you can’t tell the difference anymore.  Everyone is on Facebook and Twitter and LinkedIN and that’s fine. But this blog has never been here to scream “Look at us, we’re great!”; That’s unethical.  This blog and site were designed to serve a purpose, which was to make finding the information you need easier for you while you search at work.  We hope to do that with our new video page.  We hope to do that with our new Foreclosure Defense Page.  And, most importantly, we hope to do that by doing things you can’t possibly do online.  We hope to do our part in changing our communities.

I wish you the very best in this holiday season and the New Year.

-Daniel

Can you vacate an ill-advised stipulation from Landlord/Tenant court in New York, entered into without counsel?

Let’s admit it, lawyers can be costly.  For this reason, many landlords and tenants will forego counsel in New York and seek to handle their dispute in court pro-se, on their own.

Pro-se litigants will conference their case before a court attorney and have a Judge review their agreement before signing off on it.  Once a Judge signs a stipulation of settlement, the parties are bound by its terms.

NYC Landlord/tenant law is a very technical and highly specialized area of law.  More often than not, tenants have valid defenses to a housing court proceeding.  I’ve seen it too many times where a tenant unknowingly or mistakenly waives these defenses simply by signing a stipulation of settlement, without the benefit of counsel to advise them not to.  Either the tenant is living in an illegal multiple dwelling, is a Section 8 recipient where NYCHA was not named as a party or the landlord has waited years before bringing a non-payment action in court.  All of these scenarios present various defenses for a tenant to negotiate a settlement, or even dismiss the case outright.

Under limited circumstances, namely fraud, duress or mistake, the court may, in its discretion vacate an inequitable and ill-advised stipulation of settlement entered into between a pro-se tenant and a landlord.  It is highly recommended to contact a lawyer that specializes in landlord-tenant matters before attempting to do it on your own.

Moral of the story: the money spent on a lawyer from the get-go will save you the expense and headache of trying to undo something that shouldn’t have been done in the first place.

If she had a large amount of debt, I could help her.  If she had any debt, I could help her.  I could file a Chapter 7 Bankruptcy in New York for her and I could make sure she wouldn’t have to pay any types of credit card bills anymore.  If she had past due medical bills I could easily get rid of those also.  But that’s it.  That’s the most infuriating part.  I could help her get rid of nasty credit collectors calling her, or idiotic law firms that dont follow protocol, freezing her bank accounts without notice.  But I can’t really get her paid, or on her feet.  I can’t really help her afford luxuries like toothpaste.

And before you accuse me of being a bleeding heart, understand that I am 100% for personal responsibility.  But more and more I’m seeing clients who are working and working and they can’t possibly make ends meet.  I have a client who works a night shift….and a day shift, and he can’t afford his rent and he has no family to move in with.  Another, who bought a house, was told not to make payments to get a loan mod, and now faces foreclosure.  There must be a way to help these people.

Which brings me to my next point, which is that you can’t just throw money at the problem.  I donate a specific percentage of my profits to various organizations in an attempt to give back.  In 2012, we will donate 12% of all profits to various local organizations.  Everything from education for children in Kenya, to the Wounded Warriors Project (which is an amazing charity, by the way.)  But it’s not enough to actually transform someones life.  Thus far, my firm has partnered with The Street Academy of Financial Literacy and Pencil.org to bring Financial Literacy lessons to kids across Brooklyn.  But again, I can and should do more.  Which is why I’d like your ideas this holiday season.  As we embark and yet another few weeks/months where we say thanks for all we have (even if our families are insane…yes, yours too), we should also reflect on meaningful ways of giving back.  If you’ve any ideas/thoughts/etc., on how my law firm can really make an impact in Brooklyn or Manhattan, feel free to email us.  It’s not just donations, though.  I’m looking for real, concrete ideas to help people like the woman who lost her job when St. Vincents closed down. Or anyone you know who is trying to make ends meet.  If we can implement them, we will…and immediately.

I look forward to hearing from you.

Around the same date that MF Global filed for Bankruptcy protection, I took a cab from my Sheepshead Bay office to my Manhattan office.  I usually take the train, but that day, for one reason or another, I did not.  The driver picked me up in a beat up old Toyota 4Runner with horns on the grill.  That’s horns on the grill.  The conversation would change my perspective on things for some time to come.

The cab driver told me about working for a prominent law firm a few years back, only to be let go when the firm went belly up after some accusations of wrongdoing (happening more often these days).  He couldn’t find work in the legal sector because of his affiliation with his former employer, so he did anything he could to feed his family.  I mean anything.  He did construction work until the gas it cost him to get to his job in Connecticut ended up costing him almost as much as he was making for the day.  He worked in a pizzeria.  He sold trinkets on the street.  During that time his wife left him.  He told me that he never thought that would happen.  17 years of marriage down the drain once the money stopped coming in.  But then a funny thing happened.  I noticed he never once frowned or complained.  He took what life gave him, what this crisis gave him, and with it he shaped a new life.  He’s happy because his “scenery changes every day” while driving a cab.  He met someone new, with whom he fell in love; with whom he sells vitamins (yes, I’m serious) for extra money.  She treats him incredibly well, he told me.  And he misses none of the things he thought he would.

When the cab driver pulled up to my street, I asked him how much the cab fare was and typically when a driver doesn’t know he’ll call the dispatcher and ask.  But instead, said “I dont know. Whatever you think it typically is.”  I paid the man and thanked him.  I did so sincerely.

Somewhat dumbfounded, I stepped out of the cab and looked across the Financial District of Manhattan.  The area where bankers make money for themselves, and for New York City.  Where Occupy Wall Street, whether you agree with them or not, protests peacefully not two blocks from the epicenter of the financial world against companies and government allegedly run amok. And I thought of MF Global, and the millions of dollars missing from its books.  The countless lives likely harmed as a result.  And of a Governor who was painfully close to becoming the next Treasury Secretary.  I came to the realization that the storm is far from over.  The Country continues to balance precariously between a rebound and falling back into this deep recession that we can’t seem to lift ourselves out of.  But amongst all of this lost money and the realization that the security blankets that kept us safe at night were nothing more than a mirage (a hope or a dream), we still continue to persevere and move on and build new lives.  The very companies that were supposed to keep books and manage risk and ensure they were safe from implosion are the ones that are showing us that no one and nothing in this climate is immune.  That people who have gone broke have nothing to be ashamed of.   Understand that if you find yourself in the same position as this cab driver, or of any of your neighbors, that you’re not alone. In fact, you’re likely not the minority anymore.  The pillars that will support us as we rise again wont be companies like MF Global, but rather the hard workers that we are surrounded by every day.  The undefeated ones who refuse to accept the cards that have been dealt and instead make their own deck to play with.  This cab driver reminded me how difficult times are, and how much better they will ultimately be.  All of my clients, past, present, and future should take solace in that.

The first and most important step in stopping foreclosures across the Country is to deal with unemployment crisis.  Nothing else matters unless this changes (or Oprah says “You get a house for free and YOU get a house for free, and YOU…).  This sounds pretty simple, but for some reason, we can’t seem to grasp it.  My clients want to pay for their stuff.  They never come to me to file because they don’t want to pay for their stuff or they want to take advantage of the system.  To the contrary, they’ve likely paid idiotic debt collectors for years (at exorbitant interest rates) because they feel they have a responsibility to try and pay their debts.  The problem isn’t that their mortgage interest rate is too high.  That’s just absurd.  The problem is that many of them are now unemployed or underemployed.  We’re not at 9.1% in this Country.  Thats a mytth.  When you count the number of unemployed and “underemployed people” I would guess we’re likely closer to 17-20%.  You don’t fix housing until you fix that.  You can’t bring the interest rate of a mortgage down by 1% and expect it to change anything at all.  These people need decent paying jobs.  They need money.  Not disposable cash.  But a consistent paycheck, so that they can pay their mortgages.  If you ask someone if they want to pay $2400 for their home or $2516, they’ll obviously pick the former.  But if you ask them if they want to pay $2516 but also have a job that pays them, I’m pretty sure they could care less about the $100 difference.  You cannot put bandaids on someone’s arm when they’re internally bleeding.  You’re wasting time (and band-aids).

To effectively deal with the Housing Crisis, we also have to take definitive steps at addressing our emotions and move forward.  What we’re doing now is a little Waltz.  Dancing around the issue.  Sprinkle some mortgage relief here, maybe some there, and that’s it.  And everything still stays the same.  As I mentioned, we have two camps; they have to make peace or learn to move on.  Unless the guys in the room who think that the people who paid for homes they couldn’t afford deserve relief, we’ll get nowhere.  I understand the mentality.  I get it.  I think it’s much more complicated, but I get it.  But we need someone to reach across and say “Yes, a lot of people messed up and got caught up in the craze, but we need to move beyond this, otherwise nothing gets better.”  Half the Country bought into the notion that Real Estate prices will always go up.  But this Housing crisis has played a tremendous role in the surge of Bankruptcies, and the inability of a family to right their lives.  If you’re stuck paying for a home you can’t afford, you have two choices.  You keep paying and hope you’ll find more money (horrible idea) or you walk away and threaten the property values of your neighbors (horrible idea).  We just have to say “bad idea” and move on and forgive a ton of mortgage principle and fix this thing.  Otherwise we’re going to be pointing fingers at each other while we watch property values continue to drop or stay stagnant.

Unless this Administration, or Congress, or even the private sector, figures out a way to refinance these homes and reduce the principal owed on them, nothing changes.  These interest rate reductions will help close to no one.  It’s a joke.  If we want to effectively deal with the problem, then let’s deal with it.  But if you’re going to tell me that reducing already historically low interest rates for people who barely make enough to keep the lights on, will do anything long term, then I have something to sell you.